At a time of constraints on health care budgets in public and private sectors, health policy makers are proposing new or expanded restrictions on physicians' prerogatives to prescribe any treatment desired. One popular strategy for increasing the cost-effectiveness of health care is for payors of care to eliminate reimbursement for marginally effective technologies and services. However, the magnitude, costs and quality of resulting physician substitution of replacement therapies are not well understood. This project will use interrupted time-series analyses with comparison series to estimate the effects of a natural experiment in prescription drug-payment restrictions occurring in two Medicaid progrsms (New Jersey and New Hampshire) in 1982. It will measure effects on: overall prescription drug costs; average levels of drug exposure in several acute and chronic patient subgroups; and level of drug substitutions by physicians to effective vs. ineffective treatment, safe vs. unsafe care, and high vs. low-cost therapies in place of six representative drug groups which wre withdrawn. Analyses of several targeted comparison drugs will enhance causal interpretation of observed changes in utilizaiton. All raw data files are currently in the possession of the principal investigators, and include condensed, validated data on -22 million Medicaid drug claims (in the two settings) as well as health care and patient demographic characteristics on all New Jersey patients receiving care two years before and after the sudden elimination of payment for 141 drug groups. Graphic, statistical (segmented linear regression), and qualitative techniques will be utilized on a number of large data sets (n-800,000 patients in total New Jersey database) to estimate the size and significance of the above effects. The results of this work should provide precise estimates of the cost and quality of drug-payment restrictions, as well as other valuable insights into the responses of physicians and patients to restrictions of therapeutic choices in this and other settings